Npv, Macroeconomics

The cash flows (CFt) associated with an investment are listed below (assume that each cash flow occurs at the beginning of each year):

                        CF0  = -200

                        CF1  = 100

                        CF2  = 120

Should the firm undertake this project if:

a.  The interest rate is 5 percent (and what is the project's NPV).

b.  The interest rate is 10 percent (and what is the project's NPV).

c.  What interest rate would leave the firm indifferent to the investment decision?


Posted Date: 2/21/2013 8:16:20 AM | Location : United States

Related Discussions:- Npv, Assignment Help, Ask Question on Npv, Get Answer, Expert's Help, Npv Discussions

Write discussion on Npv
Your posts are moderated
Related Questions
Compared with the situation before 1981, the marginal tax rates imposed on individuals and families with high incomes are now lower. What was the top marginal personal income tax r

Economist mark Edward the multiplier effect of Alaska trade to Japan another 600 million is added to the state economy for Japanese recovery, associated press and local wire June 2

When investment banks underwrite IPOs, they are typically sell stock for 5-10 percent more than they pay for it. When they underwrite stock for companies that are already public, t

Snake Farm Inc. (SFI) has been offered to submit a competitive bid for building 31 and 22, 18, and 11offshore pits per year for Athletic Inc. over the next four years.  If the bid

Explain why a perfectly competitive firm does not expand its sales without limit if its horizontal demand curve indicates that it can sell as much as desires at the current market

Overnight target rates and inflation One of the major targets of every central bank is a low and stable inflation. Its main control variable is the overnight interest rate tar

Example of Introducing the Government- ACCOUNTING SYSTEM   So far there was no government in any of our stylized economies. Let us now introduce it. To begin with, our governmen

The structural deficit: A. falls as the economy expands and rises when it contracts. B. changes as actual income changes regardless of potential income. C. does not change when inc

Inflation in Sweden Figure Inflation in Sweden 1830 - 2010. Source: SCB. There are four aspects which are interesting when we look at inflation data for Sweden

What are the difference between explicit cost and implicit cost? Both are concerns to Opportunity Cost and Decisions: An explicit cost is a cost which involves essentially